GBP/JPY Technical Analysis: Bids Elusive in Search of Support
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- GBP/JPY Technical Strategy: Flat
- Risk aversion has continued to bring losses to GBP/JPY, and the pair has moved below multiple support levels.
- A long-term upward-sloping trend-line is nearing on the under-side of price action; until then, posture remains bearish.
After last week saw risk-aversion put a bearish tone in GBP/JPY, traders have continued to price the cross lower as global panic continues to sound alarm bells. Multiple support levels have been breached while GBP/JPY hasn’t been able to catch a strong bid. With the monetary implications in both GBP and JPY with the given ‘panic-prone’ climate, the pair will likely continue to trade with at least a partial correlation with the S&P 500; in which risk assets appreciate together (GBP along with stocks) while ‘safe-haven’ flows denominate the panic environment, with Yen strength to move along with weakness in stocks.
On the short side of GBP/JPY, resistance levels above current price action could be attractive for the initiation of a new short position. These levels are at 181.88 (50% Fibonacci retracement of the ‘secondary move’ taking the October 2014 low to the June 2015 high), 182.50 (major psychological level), and then 184 (confluent zone with 23.6% Fibonacci retracement of the most recent major move, taking the June high to the September low, as well as the 50% retracement of the ‘big picture’ move taking the 2007 high to the 2011 low).
For short positions, targets could be sought at 180.30 (50% Fib retracement of the secondary move), 180 (major psychological level), 179.50 (projected trend-line connecting the February 2014 low to the April 2015 low), and 178.58 (38.2% of the secondary move).
The long side of the pair could be more difficult to work with until the longer-term trend-line comes in play. If price should find support on this longer-term trend-line, long positions could become attractive with targets cast towards the previously mentioned resistance levels. This would be 180, 180.30, 181.88 and then 184.